Participation by shareholders in listed company General Meetings
Amendments are proposed to the Finnish Limited Liability Companies Act implementing the Shareholders Rights Directive in Finland. The proposed amendments will facilitate participation by shareholders in the General Meetings of listed companies, in particular for non-Finnish shareholders. The transparency of shareholder information from listed companies regarding matters to be dealt with and decisions made at the General Meetings will also be increased. In addition, the shareholder’s right to propose a matter to be included on the agenda of the General Meeting will be clarified. The Bill includes also some other amendments based on national needs.
The Government decided on the contents of the Bill today, and the intention is to submit it to Parliament at the Presidential session on Friday 17 April. The aim is to bring the amendments into force as of 3 August 2009.
Shareholders’ participation rights in listed companies in the EU area to be harmonized
The Shareholders Rights Directive aims at increasing transparency of information disclosed by listed companies throughout the Community. Increased transparency will also benefit the protection of equity investments in European listed companies cross-border. The Directive has called for only minor amendments to the Finnish Companies Act and Securities Markets Act.
The amendments will increase the protection of investors, which is consequently expected to increase investors’ trust in the stock market. This will render both Finnish companies more interesting to foreign investors and increase attractiveness of companies in the rest of the EU area in the eyes of Finnish investors. However, no exact assessment can be made of the extent to which the reform will increase shareholders’ cross-border participation in General Meetings in Finnish companies since the development depends largely on the harmonization of voting and other participation services, product development and price determination of the service providers.
Longer convocation period and better availability of Meeting documents
According to the Bill, a notice of a General Meeting shall be delivered through a stock exchange announcement no later than three weeks before the Meeting. The notice together with other meeting documents shall be kept available for shareholders on the company’s website at least three weeks before the Meeting. Additional requirements applicable to listed companies concern the contents of the notice, the use of more than one proxy representative and the publication of voting results after the General Meeting.
The deadline for a shareholder to propose a matter to be included on the agenda of the General Meeting in a listed company is proposed to be four weeks prior to the publication of the Meeting notice. In order to be included on the agenda, the matter shall be such that it falls within the competence of the General Meeting.
Facilitated participation by non-Finnish shareholders in General Meetings
Due to national needs, an amendment is also proposed regarding registration to the temporary shareholders register (record date 8 working days) and the shareholder’s notice of participation for the General Meeting (date between record date and the General meeting to be defined e.g. in the Code of the Central Depositary). This amendment is applicable only to listed companies and other companies incorporated in the Finnish book-entry system. The amendment facilitates the participation in the General Meetings of non-Finnish owners, whose shares are nominee-registered, and also the practical meeting arrangements.
Preparations to introduce electronic notice of establishment of a limited liability company
As a national proposal and in order to facilitate the use of fully electronic notice of establishment of limited liability company, the Bill proposes that a confirmation of the payment of the share capital shall not be required to be submitted to the registration authority simultaneously with the notice of establishment, but can be submitted also later. As before, the companies cannot be registered until such a confirmation has been submitted.
The proposal is related to the revision of the information system of the trade register managed by the National Board of Patents and Registration, which will allow registration electronically without documents in paper form.
Additional information:
Mr Jyrki Jauhiainen, Counsellor of legislation, Ministry of Justice, telephone +358 9 1606 7664, e-mail: [email protected]